First, obtain scale effect.
When the unit cost of products gradually decreases with the expansion of the production and operation scale of enterprises, the scale effect appears. Foreign-funded enterprises can rapidly expand their scale through mergers and acquisitions, thus reducing the average cost and increasing profits. For multinational companies, the effectiveness of achieving economies of scale through mergers and acquisitions of domestic enterprises is at least reflected in the following five aspects:
The first is economies of scale in production. Large-scale production equipment with high parameters can be used to expand production scale, thus increasing output, reducing investment and reducing unit cost; Moreover, enterprises can achieve optimal allocation during mergers and acquisitions, thus reducing production costs.
The second is the scale economy effect of marketing. The merger of several enterprises into one enterprise can enhance the overall economic strength of the enterprise and improve its market control and marketing ability; Moreover, purchasing raw materials in large quantities and selling products in large quantities can reduce the circulation cost.
The third is economies of scale in management. The centralized use of enterprise managers not only helps to improve their professional level, but also improves their work efficiency; In addition, more products participate in the distribution of management fees, which makes the management fees of production units decrease.
Fourth, the scale economy effect of financing and lending. Generally speaking, large-scale enterprises have strong strength, high credit reliability and strong anti-risk ability, and it is easy to raise funds at a lower cost.
Fifth, economies of scale in research and development. After M&A, technicians originally scattered in several enterprises can optimize their combination, jointly develop a certain technology, improve their scientific and technological innovation ability, and also help to share the cost of technological development in a wider range, avoid repeated R&D investment, and accelerate the transformation of scientific and technological achievements.
Second, lower the barriers to enter new industries and new markets.
When enterprises seek development and face shrinking industry market, they can transfer their investment to other industries or markets. Enterprises can adopt two ways: one is to expand production capacity by investing in new construction; The second is through mergers and acquisitions. When investing in new construction, it will often be strongly reacted by the original enterprises, and it may also face unfavorable factors such as professional knowledge, accumulated experience, favorable access to raw materials and preferential policies of the government. Barriers to entering new industries and markets through mergers and acquisitions can be greatly reduced. Because the merger and acquisition of enterprises has not added new capacity to the industry and market, the competitive structure within the industry and market will remain unchanged in the short term, and the possibility of price war or retaliation will be reduced. At the same time, the acquirer can obtain ready-made raw material supply channels and product sales channels, and can continue to use the plant, equipment, personnel and technology of the target enterprise, so that the production and operation can be on the right track in a short time and make profits.
Third, reduce the business risks of enterprises.
Through horizontal mergers and acquisitions, enterprises can reduce the number of competitors, improve the industry structure and enhance their control over the market; Enterprises can strengthen the control of raw materials and sales channels through vertical mergers and acquisitions, and enhance their competitiveness in the industry; Reduce business risks by improving economies of scale, market share and market control; Enterprises can achieve diversification through mixed mergers and acquisitions, thus enhancing their ability to resist unforeseen sudden environmental changes and enabling enterprises to develop more stably.
Fourth, gain scientific and technological competitiveness.
Science and technology are playing an increasingly important role in today's economic development, and the competition among enterprises has also changed from the competition of cost and quality to the competition of science and technology. Due to the explosive growth of technological change itself, it has produced continuous competitive pressure on enterprises. In this case, enterprises often carry out mergers and acquisitions in order to gain scientific and technological advantages. If a country's enterprises want to maintain their dominant position in products and technology, it is far from enough to rely solely on their own research and development. Only by cooperating with innovative enterprises in the target country can they accelerate the acquisition of benefits brought by high-tech and product upgrading. Although the R&D ability of domestic enterprises is generally weaker than that of multinational companies, they also have their own advantages in some technical links, especially because they know domestic consumers and the products they launch may be more suitable for the local market. More importantly, as the life cycle of products is getting shorter and shorter, once multinational companies develop new technologies and products, they must push them to the world market in the shortest time to share the high R&D costs and maximize profits. In this case, the merger and acquisition of related enterprises can save valuable time, and it is easier to achieve the goal than the new enterprise, especially when international trade is still hindered in some way. In 2008, Midea Electric acquired 24.0 1% equity of Little Swan for10.68 billion yuan, and became the controlling shareholder of Little Swan. Through strong alliance, the comprehensive technical strength of Midea's washing machine business has been comprehensively improved, the industrial structure and strategic layout of the company's white goods have been further optimized and improved, and the overall production capacity and sales scale of Midea's ice washing business have been rapidly improved, highlighting the strategic intention of accelerating the development of ice washing.
Verb (abbreviation of verb) experience sharing and complementary effect
M&A can achieve the effect of empirical curve. In many industries, especially those that require high quality of labor, the more experience enterprises have accumulated in production and operation, the lower the unit cost. Through mergers and acquisitions, enterprises can share the experience of the target enterprise and form a strong competitive advantage.